Using a HELOC to Buy Another Home

As home values have risen across the country, many homeowners find themselves sitting on a valuable asset: equity. A Home Equity Line of Credit (HELOC) can be a smart way to tap into that equity, whether you're looking to invest in a second property or help your children get a financial head start.

What Is a HELOC?

A HELOC is a revolving line of credit secured by your home. Unlike a traditional loan, a HELOC gives you flexible access to funds, similar to a credit card — but usually with much lower interest rates.

Using a HELOC to Buy Another Home

Whether you're buying a vacation property, downsizing while keeping your current home as a rental, or helping your adult kids into their first home, a HELOC can provide the down payment — or even cover the full purchase in some cases.

Pros:

• Access to potentially large sums of cash

• Typically lower interest rates than personal loans or credit cards

• Interest may be tax-deductible if used for home improvement (consult your tax advisor)

Cons:

• Your current home is collateral

• Variable interest rates can increase your monthly payments

• It adds to your debt load

Helping Your Kids Get Set Up

Parents often use HELOCs to help their children with:

• A down payment on their first home

• Education expenses

• Starting a business or covering early-career costs

It can be a meaningful way to pass on generational wealth — without giving up your savings or retirement funds.

Is It Right for You?

A HELOC isn’t a one-size-fits-all solution. If you have solid equity, stable income, and a clear repayment plan, it can be a powerful financial tool. But it’s important to understand the risks — especially if you’re leveraging your home to help someone else.

Before you move forward, talk to a trusted lender or financial advisor to weigh your options.